Community leaders across the commonwealth and Pennsylvania’s 11th Congressional District applauded a bipartisan bill recently introduced by U.S. Rep. Lloyd Smucker (R-PA) that would make permanent the 20-percent deduction for small and individually owned businesses under Section 199A of the Internal Revenue Code.
“Small businesses need predictability and making Section 199A permanent will provide Main Street with the certainty they need to invest in their workforce, operations, and community,” Smucker said last week. “As Congress works with the Trump administration to renew expiring provisions of the Tax Cuts and Jobs Act, I will continue to fight for Section 199A and tax policies to support small businesses and families.”
On Jan. 23, Smucker led 154 of his congressional colleagues in introducing the Main Street Tax Certainty Act, H.R. 703, to permanently extend Section 199A, which is slated to expire at the end of the year. Section 199A allows up to a 20 percent pass-through income deduction for small businesses organized as sole proprietorships, partnerships, S corporations, trusts, or estates, or income from qualified REIT dividends and income from publicly traded partnerships.
Most small businesses are structured as a pass-through. Section 199A, which was adopted as part of the landmark 2017 Tax Cuts and Jobs Act, promotes equity in America’s tax code between small businesses on Main Street and larger corporations, said Smucker.
The measure is supported by more than 230 organizations, including the Pennsylvania Manufacturers’ Association (PMA), the PA Chamber of Business and Industry, the Pennsylvania Restaurant & Lodging Association (PRLA), the Pennsylvania Food Merchants Association (PFMA), and the Pennsylvania Farm Bureau, among others.
“More than 85 percent of businesses in Pennsylvania are small businesses, including most small and medium sized manufacturers,” said PMA President and CEO David Taylor. “These employers are the bedrock of their local economies in communities across the commonwealth.
“Reaffirming Section 199A will allow these businesses to reinvest in their employees and operations to better meet the needs of their customers,” he said.
PA Chamber of Business and Industry President and CEO Luke Bernstein agreed, commending Smucker for his leadership and urging lawmakers to come together to quickly pass the bill. “By securing the pass-through deduction, Congress can provide the stability and predictability these employers need to invest, grow, and create jobs,” he said.
PRLA President and CEO Joe Massaro said small businesses in hospitality and lodging continue to navigate pressures from escalating costs, workforce changes, and unpredictable increases on items like energy and insurance costs.
“Congressman Smucker’s Main Street Tax Certainty Act is the support and certainty that the industry needs,” said Massaro. “This legislation cements its commitment to Pennsylvania’s small businesses, and helps ensure relief for employers. This type of long-term relief will help Pennsylvania restaurants and hotels continue creating new jobs, expanding employee benefits, and creating memorable experiences across the commonwealth.”
Predictability is essential for any business, agreed Alex Baloga, president and CEO of the PFMA.
“Making Section 199A permanent ensures small businesses, including many family-owned food retailers, wholesalers, and distributors across Pennsylvania, can rely on equitable tax treatment,” Baloga said. “Congressman Smucker’s legislation offers much-needed stability and prevents a looming tax increase set for 2025.”
Agriculture is another industry that also needs certainty provided by the tax code, said Chris Hoffman, president of the Pennsylvania Farm Bureau, who noted that Section 199A is a vital tax deduction that most farmers have relied on since the passage of the Tax Cuts and Jobs Act.
“Many have said their farm simply cannot afford to return to a tax code without Section 199A because with record high input costs and decreasing profit margins, some are in survival mode,” said Hoffman.
At the national level, supporters of the bill include the National Federation of Independent Businesses, the National Association of Manufacturers, Associated Builders and Contractors, the American Farm Bureau Federation, and the U.S. Chamber of Commerce, among numerous others.